Manchester’s thriving tech sector now accounts for nearly half of all enquiries for city centre office space, say consultants.
A steady rise in tech, media and telecoms sector take up is eating city centre floorspace.
Colliers International say that almost 40% of new enquiries coming from the technology sector alone as operators seek access to Manchester’s skilled workforce.
Manchester already has around 63,000 tech jobs – almost as many as the combined total for Liverpool (23,000), Leeds (24,000) and Sheffield (19,000) – and it is growing fast.
The growth of the tech sector has been emphasised by the arrival in the city of global co-working specialist WeWork.
They have signed up for 60,000 sq ft at Allied London’s No1 Spinningfields. The Manchester office will be their first UK location outside of London.
Joe Gaunt, the UK managing director for WeWork, said: “Manchester is an obvious choice for our second city.
“The city has excellent infrastructure and a growing tech and start-up sector and is showing itself to be an increasingly appealing destination providing a fantastic work life balance.”
Rob Yates, partner and head of office agency at Cushman & Wakefield Manchester, said: “The fact that WeWork has chosen Manchester for its first UK office outside the capital is testament to our belief of the underlying strengths of the Manchester offer.
“The pull of the city is immense making it is the obvious destination for occupiers considering the regions, offering quality accommodation, access to a highly skilled young talent pool and a good quality of life.”
The claims come as agents predict that London-based businesses moving north will tip Manchester city centre office take over 1m sq ft this year, consultants are predicting.
More London-based businesses seeking premises in Manchester means total office take-up in the city is set to exceed more than 1 million sq ft for the fourth successive year, according to the latest office market snapshot by real estate advisors Colliers International.
Colliers said that a strong pipeline of enquiries from businesses in the capital, along with relocators from elsewhere in the UK and from overseas, meant a positive outlook for the Manchester office market as the city’s property business prepares for the autumn deal-making season.
They follow London-based international law firm Freshfields Bruckhaus Deringer, taking 80,848 sq ft at One New Bailey, Salford.
Peter Gallagher, director at the Manchester office of Colliers International, said: “Over the next two years, there are at least 1.2m sq ft of lease events for more than 3,000 sq ft and a further 1.12 million sq ft facing three or five-year rent review.
“Given the strong pipeline of enquiries and the prospect of several London-based occupiers looking to set up offices in Manchester to cut costs, the outlook for the rest of 2017 looks positive with take-up set to exceed one million sq ft for fourth year in a row.”
Colliers’ reported that office market sentiment remained upbeat with a ‘solid’ take-up of 284,497 sq ft of space in the second quarter of 2017, bringing the total take-up for the entire first half of the year to 492,730 sq ft.
The figures for the quarter and the half year represented increases of 37 per cent and 17 per cent respectively on the totals for the same periods of 2016.
A total of 68 deals in the second quarter included five transactions involving in excess of 10,000 sq ft such as existing current city centre occupiers Kaplan Financial and CarFinance247 both relocating to Universal Square.
Colliers’ research reiterated that with no new Grade A build completions due in 2018 and demand continuing to squeeze supply, prime rents in central Manchester were expected to continue rising and to hit £40 per sq ft by 2020.
As available Grade A stock remained limited, demand for Grade B office space rose by 10 per cent year-on-year to £27 per sq ft.
With funding for speculative development still hard to come by, just two new developments have started in 2017 – the 180,000 sq ft Landmark Grade A office scheme on the former Odeon cinema site bordering St Peter’s Square and 125 Deansgate (formerly Lincoln House) while three other major schemes at 11 York Street, 100 Embankment and two New Baily Square are due to be underway this year.